Crisis Hampers Internationalization of Portuguese SportZone

LISBON, Portugal – The major Portuguese sports retail chain SportZone that is also selling bikes and bike products, is feeling the pinch of the economic crisis. Not only because of the bad shape of the sporting goods market in Portugal but also due to the fact that its internationalization strategy is hampered by the international real estate crisis.

SportZone intends to become a sports retail chain that covers the whole of the Iberian peninnsula with a total of about 100 stores in 2010. However, the company’s expansion plans do not stop there as SportZone is also planning to enter other markets like Italy and Turkey.

SportZone is owned by Sonae Distribuição, a subsidiary of the Sonae Group which is a Portuguese holding that runs supermarkets and shopping centers in various countries. Paulo Azevedo, Sonae’s chief executive, has defined internationalization as a priority for the group, aiming for operations abroad to represent 25% of the group’s total specialty retail sales and 35% of the total assets by 2012.

SportZone’s plans for Turkey has been put on hold. The opening of its first store in Istanbul has been postponed as the real estate project in which the store is located, is stopped. The same is happening at other planned openings of SportZone stores in the Iberian peninnsula. There were six more stores to open in Portugal and six in Spain, but these have been delayed and some could be cancelled.  

Currently SportZone operates 70 stores in Portugal, 4 more than at the end of 2008, and 10 in Spain. SportZone continues to grow in turnover. During the first half of 2009 Sonae’s total turnover increased 7% while the specialty retail segment, to which Sport Zone belongs, had the best performance, recording growth of 24.7% to € 473 million.

Next to Sport Zone, Sonae’s specialty retail business includes brands as Worten (electronics and household appliances), Loop (shoes), Modalfa and Zippy (apparel). SportZone is the biggest contributor with a turnover to Sonae’s specialty retail business with € 204 million, or 64.5% of the turnover.